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Market Measures

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Premium | Why Selling It Works

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

When trading options, we normally look to sell options when Implied Volatility (IV) Rank is high. This is because it allows us to collect a larger amount of premium. We have found that this strategy is very beneficial for retail investors. Today, Tom Sosnoff and Tony Battista take a look at a massive study that compares selling premium as opposed to buying it. First they look at buying a strangle compared to selling a strangle every 5 days over the last for years. They see that selling the strangle is much more profitable than buying it. They then take this one step further and run the same study for everyday over the same time period. Again, selling premium works and by increasing their number of occurrences, they are able to mitigate any losses that occurred!

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